ANNUITY CO PPT Final

Lord our God, we thank you for
giving us your love, for letting us

draw nearer to what is right and
good. May your Spirit penetrate
everywhere, overcoming what is
false and helping people
everywhere to understand the
true nature of your justice. Guard
us on all our ways.
Amen.
A C T I V I T Y
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ANNUITIES
OB J E CT I VE S
At the endtof the lesson the students will be able to:
Identify simple and general annuities.materials

that are needed in construction
Solve simple annuity.
Recognize the practical applications and importance

of Simple annuity in class discussion
Installment
Payments by installment are
done periodically, and in
equal amounts. This payment
scheme is called Annuity
Definition of Terms:
ANNUITY– a sequence of payments made at
equal(fixed) intervals or periods of time
Term of an annuity, t – time between the first
payment interval and last payment interval.
Regular or Periodic payment, – the
amount of each payment.
Amount (Future Value) of an annuity,
F – sum of future values of all the payments to be
made during the entire term of the annuity.
Present value of an annuity, P – sum

of present values of all the payments to be made during
the entire term of the annuity.
Annuities may be classified in different ways, as follows.
Time diagram for its cash flow
Example of using time diagram
Both simple and general annuities have a time
diagram for its cash flow. The main difference
is that in a simple annuity the payment
interval is the same as the interest period
while in a general annuity the payment
interval is not the same as the interest period.
 Example of a simple annuity - Installment
payment for an appliances at the end of each
month with interest compounded monthly
 Example of a general annuity - Installment

payment for an appliance at the end of each
month with interest compounded annually.
Let’s try to solve problems
involving annuities
EXAMPLE 1
Suppose Mrs. Remoto would like to
save P3,000 at the end of each
month, for six months, in a fund
that gives 9% compounded monthly.
How much is the amount or future
value of her savings after 6 months?
Given:
A = P3, 000 m = 12
r = 0.09 i = = 0.0075
t = 6 months or ½ year
Find: F =?
(1) Illustrate the cash ow in a time diagram
3000 3000 3000 3000 3000 3000
0
1 2 3 4 5 6
(2)Find the future value of all the payments at the
end of the term (t = 6)
(3) Add all the future values obtained from the previous step
3, 000 = 3, 000
(3, 000)(1 + 0.0075) = 3, 022.5
(3, 000)(1 + 0.0075)2 = 3, 045.169
(3, 000)(1 + 0.0075)3 = 3, 068.008
(3, 000)(1 + 0.0075)4 = 3, 091.018
(3, 000)(1 + 0.0075)5 = 3, 114.20
F = 18, 340.89
Thus, the amount of this annuity is P18,340.89.

Formula for finding the future value
involving ordinary annuity
Another formula in another books
Where, F= future value A= annuity/regular payment

r=rate m=conversion period
t= time in years
Let use solve Example 1 using the derived formula.
EXAMPLE 1
Suppose Mrs. Remoto would like to save
P3,000 at the end of each month, for six
months, in a fund that gives 9% compounded
monthly. How much is the amount or future
value of her savings after 6 months?
Given:
A = P3, 000 m = 12
r = 0.09 i = = 0.0075
t = 6 months or ½ year
Find: F =?
SOLUTION:
18, 340.89
EXAMPLE 2
In order to save for her high
school graduation, Marie
decided to save P200 at the end
of each month. If the bank pays
0.250% compounded monthly,
how much will her money be at
the end of 6 years?
ACTIVITY
Mr. Suave is a very rich man. There are lots
of professional people who lend/borrow
money from him. The problem is he cannot
collect the money because of his busy
schedule. You as a staff of Mr. Suave are task
to collect the money. The contracts of the loan
is in the piece of paper. Solve if how much
money you should collect from each
individual.
Your presentation will be rated according to this rubric.
Assessment
Fill in the blanks. Directions: Read and analyze each question and
write the word that describes the sentence.
1. A sequence of payments made at equal time periods is a/an

_______________
2. A simple annuity in which the payments are made at the end of each
period is a/an _______
3. An annuity where the payment interval is not the same as the interest
period is a/an ________
4. An annuity where the payment interval is not the same as the interest
period is a/an ________
5. An annuity in which payments begin and end at denite times is a/an
_________
ASSIGNMENT:
Find the Future Value of the following simple
annuities. (5POINTS EACH)
1. Quarterly payments of P2,000 for 5 years with
interest rate of 8% compounded quarterly.
2. Semi-annual payments of P8,000 for 12 years
with interest rate of 12%
compounded semi- annually.
3. Daily payments of P50 for 30 days with
interest rate of 20% compounded daily
THANK YOU

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Lord our God, we thank you for

giving us your love, for letting us

At the endtof the lesson the students will be able to:

Identify simple and general annuities.materials

Recognize the practical applications and importance

Present value of an annuity, P – sum

 Example of a general annuity - Installment

3000 3000 3000 3000 3000 3000

Thus, the amount of this annuity is P18,340.89.

Where, F= future value A= annuity/regular payment

1. A sequence of payments made at equal time periods is a/an

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